Sh3b tax bid on teachers' pay opposed

A teacher at St Mary's Girls Primary School in Nakuru. Keen to leave a legacy, Uhuru identified affordable housing, healthcare and food security as his areas of focus ahead of his retirement. [File, Standard]
A teachers' union has opposed plans to deduct its members salaries to finance the Government's housing project under the Big Four agenda.

The Kenya National Union of Teachers (Knut), in its report on the impact of 1.5 per cent housing taxation plan, said its members would collectively contribute Sh3 billion when the Finance Bill 2018 becomes effective.
Knut said the tax measure would cut the pay for its over 300,000 members which is already less than one-third of net income.
The union said the new taxes would subject teachers to embarrassment as they were already burdened by personal loans and other statutory deductions.

“At the moment, every member is earning a net salary of one third of the gross salary, so a deduction of 1.5 per cent reduces the net earning further, lowering the earning of the statutory requirement,” read the report to be tabled this week during this year’s annual delegates conference at Bomas of Kenya.
The report added: “This automatically exposes the teacher, making the teacher vulnerable to pecuniary embarrassment and hence subjected to disciplinary action by employer."
Knut Secretary General Wilson Sossion said the report would form part of documents that would be subjected to the vote during the conference.
The report showed that teachers would part with as high as Sh2,300 monthly, with the lowest-paid teacher paying Sh407 a month.
The tax will lower teachers’ income as projected in the collective bargaining agreement (CBA), said the report.

“Basic income aspect was not increased and where it was increased, it was by a margin of less than three per cent. Taxing the same would imply that workers' gains are being snatched back by the Government,” read report.
The report showed the current basic pay of teachers in various grades, their current net pay after deductions and projected their pay after the tax.
“Calculations of teachers' pay in the three salary bands per grade shows after deductions of the housing allowance, teachers will take home less than a third of basic salary,” said Mr Sossion.
The report projected the lowest-paid teacher, under Grade B5, who currently earns Sh27,195 after monthly deductions, took home Sh12,086.
And after the housing tax of Sh407, the teachers would have a net pay of Sh11,678.74, which was less than a third of basic salary.

The report also raised fundamental questions that teachers wanted answered before the rollout of the scheme.
“The main point of concern is whether the land on which the houses will be erected has been identified and purchased. Given the nature of the process of land acquisition, the biggest concern is whether the fund would be able to sustain the acquisition of land and then sustain erection of the houses,’ read the report.
Teachers’ also wanted to know whether county infrastructure development plans would accommodate the water and sewerage demands for the project.
Overall, Knut wanted to know how the housing plan would be administered and whether the administrative structure shall cascade to the county level.
The teachers also wanted to know how transfers would affect teachers and whether they would emigrate with the rights to purchase housing facilities in the new county stations.

The highest-paid teachers, those under Grade D5 who currently have a basic salary of Sh152,937 and a net pay of Sh67,972 after monthly deductions, would pay Sh2,294 in taxes.
Affordable housing
Keen to leave a legacy, President Uhuru Kenyatta identified manufacturing, affordable housing, healthcare and food security as his areas of focus ahead of his retirement.
In January this year, Uhuru said he planned to create 1.3 million manufacturing jobs by 2022 and achieve 100 per cent health coverage for every Kenyan.
President Kenyatta and his deputy, William Ruto, also announced that they would work hard to expand food production and supply, provide universal health coverage for all Kenyan homes and build 500,000 affordable houses, all under the Big Four agenda.
But critics argue the Big Four might not necessarily be the silver bullet to knock out the country’s endemic problems of poverty, ignorance and disease.